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Two Harbors Investment Q3 Earnings: Can NYSE:TWO Hit Its $0.21 EPS Target?

in EARNINGS/INVESTING IDEAS by

Two Harbors Investment Corp. (NYSE:TWO) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.21/share on revenue of $64.203 million. The consensus earnings per share (EPS) of $0.21/share is based on a poll of 8 analysts and represents a decline in eps of −4.4% over the same quarter last year, when the company reported earnings of $0.22/share.

The revenue forecast of $64.203 million based on a poll of 5 analysts implies a year-over-year (YoY) growth in revenue of 9.4%. Last year the company reported $58.663 million in revenue for the quarter.

Expected to report EPS contraction of −4.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $64.20 $58.66 9.4%
EPS $0.21 $0.22 −4.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 8 tracked quarters, missed 5 quarters, and met expectations 1 quarter.

What are your expectations from Two Harbors Investment Corp. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.13 -$0.05 −138.4% Missed
Q1, 2020 $0.27 $0.25 −8.4% Missed
Q4, 2019 $0.36 $0.23 −35.9% Missed
Q3, 2019 $0.40 $0.22 −43.5% Missed
Q2, 2019 $0.42 $0.39 −7.8% Missed
Q1, 2019 $0.48 $0.49 2.5% Beat
Q4, 2018 $0.47 $0.49 3.9% Beat
Q3, 2018 $0.48 $0.48 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −4.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $5.38 $5.14 −4.5% Decline
May 6, 2020 $4.54 $4.48 −1.3% Decline
February 5, 2020 $15.30 $15.42 0.8% Increase
November 5, 2019 $13.87 $14.18 2.2% Increase

Fundamentals And Technical Analysis

Two Harbors Investment Corp. is currently trading at $5.03/share, down −4.1% for the day. The company is trading at approximately 31.4% of its 52-week high of $15.85/share. The company’s stock price is down −2.2% since the last earnings report and down −3.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.14 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:TWO Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −0.81 and a forward P/E multiple of 7.98.

Two Harbors Investment Corp.’s current share price also implies a price-to-book (P/B) multiple of 0.73. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $5.03
P/E Ratio −0.8x
P/E Ratio (Fwd) 8.0x
PEG Ratio 0.0
Total Debt / Total Capital 88.1%
Levered Free Cash Flow $681.5 million
Price To Sales -6.4x

Finbox

Two Harbors Investment Corp. is a small-cap stock with a market capitalization of $1.434 billion. The company operates in the Financials sector and the Mortgage Real Estate Investment Trusts (REITs) industry.

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), non-agency securities, mortgage servicing rights, and other financial assets in the United States. Its target assets include agency RMBS collateralized by fixed rate mortgage loans, adjustable rate mortgage loans, and hybrid adjustable-rate mortgage (ARMs); non-agency securities collateralized by residential mortgage loans; and other assets, such as financial and mortgage-related assets, as well as residential mortgage loans and non-hedging transactions. The company qualifies as a REIT for federal income tax purposes. As a REIT, the Company must distribute at least 90% of annual taxable income to its stockholders. Two Harbors Investment Corp. was incorporated in 2009 and is headquartered in New York, New York.

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